So, I just read that Snap Deal deal site has raised 50 million US$ as a new series B round.
Also, the Wall Street Journal reports that Flipkart is raising 150 million US$ at a 1 BILLION $ valuation.
Will deals like these CRASH the Internet Party of India?
I keep remembering 1999-2000 with the outrageous fundings of Bazee.com, Indiainfo.com and the holocaust that followed.
Yeah, Yeah – I know all about the ‘This time its different’ and ‘India has 100 million Internet users’ etc argument, but I am not convinced.
E-COMMERCE
– Honestly speaking, E-Commerce and after sales etc is almost a commodity business. I can understand that many years ago, operators could not speak properly to customers (like Govt. PSU employees still do today) – but that concept is now understood by everyone of us – e-commerce entrepreneurs for sure.
There are manuals and manuals of how Zappos.com etc are managed and I dont think that pre and after sales ‘delight’ etc is a major value proposition in itself to create value for e-commerce.
– What is to be expected of existing brick and mortar shops? Will Crossword shut down or will they resurrect into click + brick ? Will BigBazaar lie low and not attempt to maul the Internet E-commerce business themselves?
– What about Amazon and the BIG BRANDS that have descended here? Tell me to log into Amazon.co.in the day it launches (for the same books and music I want to buy from Flipkart) and BOY – I will switch my loyalties in a minute
– Will India shop like the USA does? Will e-commerce be a ‘fancy novelty’ like Snooker tables and Bowling Lanes for young Indians to be abandoned at a whim? I mean what do young Indias read nowadays anyway? My point here is that ‘e-commerce’ may not mimic what has worked in the USA
– Margins – we see this a typical death spiral as it happens when lots of money chases one vertical. Every Ram, Shyam and Dham will start offering better and better margins to customers to shop (discounts) and better and better value to goods providers (Brands) – thereby becoming a marginal business.
– Finally customer acquisitions! How will a positive ROI be maintained for the same set of consumers (urban Indian)? I mean you cant do ‘Village road shows’ to get villagers to buy on e-commerce sites, can you?
DEALS
– I DONT get it. Last time I wrote about SnapDeal offering me a good deal to visit a DENTIST!
– Can deals be forced down consumers throats just because the Company that does deals got funded? The question I ask is – can TAKING DEALS be made a new consumer habit in India?
– In the USA, with the level of GDP AND a propensity to spend MORE than what you earn, combined with the VARIETY of things available, I can have deals on Hot Air Baloon Rides, visits to Alcatraz Prison, a discounted tour of the Rocky Mountains and even 100 parachute jumps for the price of 50. How many INTERESTING DEALS can we expect in a country where people dont eat every day?
– In the DEALS business also, like I mentioned above, very soon, deal sites will begin BRIBING the Brand to allow exclusivity to offer a deal of that brand on their site. This happened in the OOH (Out of Home) media business here. Websites in their quest throw deals at the SAME consumer will very soon be OUT OF POCKET (rather than earning 50% margins) just to prevent the other website from offering the same deal.
– And again, the cost of Acquiring customers. hahaha – I think a deal site will spring up to offer DEALS to other Deal sites just to get new customers!
All said and done, I HOPE I AM WRONG.
There are some sincere, hard working entrepreneurs trying to create a real and sustainable value proposition business the real way in the Internet space in India. They dont want a rich bitch to come in, get drunk and then vomit all over the place and shut the party down.
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